Convergence Group Plc and Another v Chantrey Vellacott (A Firm)
| Jurisdiction | England & Wales |
| Judge | Lord Justice Jonathan Parker |
| Judgment Date | 16 March 2005 |
| Neutral Citation | [2005] EWCA Civ 290 |
| Docket Number | Case No: A3/2004/1462 |
| Court | Court of Appeal (Civil Division) |
| Date | 16 March 2005 |
[2005] EWCA Civ 290
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM
Mr Justice Lloyd
CH/2004/PTA/0181
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Clarke and
Lord Justice Jonathan Parker
Case No: A3/2004/1462
Anthony Temple QC and Sean Brannigan (instructed by Davies Arnold Cooper) for the Appellants
Michael Crane QC and John Taylor (instructed by Squire & Co) for the Respondents
This is the judgment of the Court.
INTRODUCTION
This is an appeal by The Convergence Group PLC ("PLC") and Convergence Group International SA ("SA") from an order made by Lloyd J on 25 June 2004.
The appellants are the defendants in a consolidated action brought against them by Chantrey Vellacott, chartered accountants ("CV"). In the action, CV sues the appellants for fees in respect of work carried out by it for the group of companies of which PLC and SA are members, known as the Convergence Group ("the Group"). The work in question related to a proposed reorganisation of the Group structure, with a view to attracting investors and/or funders for major international telecommunications projects.
By their Defence and Counterclaim in the action, the appellants admit that they have not made any payment in respect of CV's fees for the work in question, but they allege that they are not obliged to do so since CV was guilty of negligence both in relation to the content of the advice which it gave and in relation to allegedly substantial delays for which it was responsible in providing and implementing its advice. In consequence, so it is alleged, the work done by CV was worthless. In addition, by their Counterclaim the appellants claim substantial damages, including damages for the loss of an opportunity to take advantage of a window in the market to progress a substantial international project referred to as the Marco Polo Project.
The claim form in the action was issued on 14 May 2001. The Particulars of Claim are dated the same day.
The Defence and Counterclaim was served on 14 August 2001, and re-served as amended in October 2002.
By an application notice dated 8 March 2004 the appellants applied for permission to re-amend the Defence and Counterclaim in a large number of respects.
The application was heard by Master Price in the course of a case management conference on 12 March 2004. In the time available, the Master was unable to deal with all the proposed amendments. He did, however, deal with a number of them, which, in the result, he disallowed.
The appellants appealed to the judge against Master Price's order, with the permission of Lightman J.
The hearing of the appeal took place before Lloyd J on 25 June 2004. At the hearing, the appellants renewed their application for permission in respect of the remainder of the proposed re-amendments which Master Price had not had time to consider.
By paragraph 1 of his order dated 25 June 2004, Lloyd J dismissed the appellant's appeal against Master Price's order dated 12 March 2004. By paragraph 3 he granted the appellants permission to re-amend their Defence and Counterclaim in a number of specific respects. By paragraph 3 he gave the appellants liberty to submit to CV revised drafts of certain further paragraphs in the pleadings which the appellants had sought to re-amend. By paragraph 4, he dismissed the appellant's application in relation to the remainder of the proposed re-amendments.
Lloyd J refused permission to appeal to this court (in so far as he was in a position to do so, given that in respect of paragraph 1 of his order the appellants sought permission for a second appeal within the meaning of CPR 52.13).
The appellants applied to this court for permission to appeal. The application was dealt with by Chadwick LJ on paper. He adjourned the application to an oral hearing on notice, with the substantive appeal to follow should permission be granted. He expressed his reasons as follows:
"The application for permission to appeal is advanced on the basis that the appropriate test is that in CPR 52.3(6)(a) – see paragraph 9 of the Skeleton argument. That seems to overlook the fact that, in the first part of his judgment (paragraphs 1–32) Mr Justice Lloyd was plainly treating the matter before him as an appeal from the Master – so that any further appeal from paragraph 1 of the Order (as it appears in draft) would be within CPR 52.13. Permission to appeal cannot be granted by this court unless it considers that the appeal would raise some important point of principle or practice or that there is some other compelling reason for the court of appeal to hear it. The applicants have not addressed that requirement; and have not explained why they do not need to do so.
At first sight, at least, the appropriate test on the application for permission to appeal from paragraph 4 of the order (as appears in draft) is that in CPR 52.3(6) – but, as it seems to me, the proposed respondents should have the opportunity to argue the contrary if so advised. Further, it would be unsatisfactory to determine an application for permission to appeal from paragraph 4 without having, first, reached a conclusion whether there is to be an appeal from paragraph 1."
This, then, is the adjourned hearing of the application for permission to appeal against Lloyd J's order. In the light of the direction given by Chadwick LJ, we considered it sensible to hear full argument on all the proposed amendments before turning to the question whether (and if so, to what extent) permission to appeal should be granted.
PART 17 OF CIVIL PROCEDURE RULES ("CPR")
CPR 17.1 (2) provides that a statement of case, once served, may be amended only with the written consent of all the other parties (subparagraph (a)) or with the permission of the court (subparagraph (b)).
CPR 17.4 provides as follows (so far as material):
"(1) This rule applies where –
(a) a party applies to amend his statement of case in one of the ways mentioned in this rule; and
(b) a period of limitation has expired under –
(i) the Limitation Act 1980; …
(2) The court may allow an amendment whose effect will be to add or substitute a new claim, but only if the new claim arises out of the same facts or substantially the same facts as a claim in respect of which the party applying for permission has already claimed a remedy in the proceedings. …."
It is common ground in the instant case that if the proposed re-amendments would, if allowed, add a "new claim", within the meaning of CPR 17.4, the requirement in CPR 17.4(1)(b)(i) will be met, and CPR 17.4(2) will accordingly apply.
THE DISPUTE IN OUTLINE
The Group is engaged in the international telecommunications business. The appellants allege that in or about November 1996 the Group, via Mr Robinson of PLC, retained CV to provide tax and accountancy advice in relation to a proposed reorganisation of the Group structure intended to lead to current and future international business projects being carried forward in a tax efficient and effective way, with particular reference to the obtaining of third party funding for the Marco Polo Project. The appellants allege that it was only after much chasing and complaining in correspondence that CV progressed matters sufficiently to enable the appellants to approach third party investors with a group structure suitable to attract investment.
The appellants further allege that the structure devised by CV was incorrect and unsuitable, and that the implementation of the necessary steps to create that structure was slow, careless and incomplete. They go on to allege that due to the delays which had occurred, together with foreseeable changes in the availability of funding opportunities in the international telecommunications market, the window of opportunity for obtaining such funding was lost. As a result (so they allege) very substantial costs were wasted and had to be written off, and the appellants lost the chance to bring a potentially lucrative project to the market.
For their part, CV denies almost every element in the appellants' case. It denies that it was ever asked to formulate or implement an international restructuring of the Group, or to do so for the purpose of obtaining funding for the Marco Polo Project. In any event, it denies that it performed any services negligently, and it denies that any loss has been suffered by the appellants as a result of any advice or other service provided by CV.
By the proposed re-amendments, the subject of this appeal, the appellants seek to add to their Amended Defence and Counterclaim numerous allegations of negligence which relate, in whole or in part, and either directly or indirectly, to the period between November 1996 (the admitted date of CV's retainer) and November 1997. For convenience, we will refer to the period from November 1996 to November 1997 as "the first year".
The appellants contend (by Mr Anthony Temple QC, leading Mr Sean Brannigan) that the court should exercise its discretion under CPR 17.1(2)(b) by allowing the proposed re-amendments on the usual terms as to costs, since it has not been suggested that to do so would cause any prejudice to CV.
CV, on the other hand, contends (by Mr Michael Crane QC, leading Mr John Taylor) that there is no claim on the pleading as it stands in relation to the first year; and that the proposed re-amendments accordingly introduce a new claim. On that basis, it contends that the...
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